“The dominant question in capitalist circles in the midst of the present Great Recession is: When will we get back to growth? But that growth path is carrying us to the brink of extinction. It cannot simply be a question of getting back to it. Yet the assumption that “growth” is the both the norm and the ideal is written into much of our language and thinking. For instance, we speak of “developed” countries and “developing” countries. A common assumption prompted by the very logic of these concepts is that “developing” countries are (and should aspire to be) on their way to becoming just like “developed” countries. In the first place as a factual assumption this is an illusion – few, if any, “developing” countries are actually on their way to becoming “developed”. Building working class hegemony on the terrain of a national democratic struggle: SACP CC Internal Discussion Document
http://www.economist.com/debate/days/view/501 Finding ways to improve humanity's living standards is the point of economics. Having a good measure of living standards, you may think, is therefore pretty fundamental to the discipline. For decades economists have turned to gross domestic product (GDP) when they want an estimate of how well off people are. By how much are Americans better off than Indians, or than their parents' generation? Chances are the answer will start with GDP. GDP is really a measure of an economy's output, valued at market prices (to the extent that you have them). As societies produce more, and therefore earn more, their material well-being rises. So it is no surprise that so many economists and official statisticians broadly accept GDP as a measure of living standards. It isn't the only measure. Even before the recent recession, a lot of debate over American living standards was based not on GDP, which was growing healthily¬, but on median incomes, which were not: the point was that national output was growing, but that its fruits were not being evenly shared. It doesn't cover everything: not all the things that we value are bought and sold in the marketplace. But when economists want to measure the living standards of whole societies, GDP is where they usually start. That said, economists and statisticians have been debating for years whether GDP measures what truly matters. It may capture material wealth, broadly, but is that enough? If it is not enough, with what should it be replaced—or, more likely, supplemented? With assessments of the environment? Measures of people's health? Estimates of their happiness? And how might all these different aspects be combined? If some new measure is closely correlated with GDP, then GDP, though imperfect, may be good enough. If it is not, then focusing on GDP could be an error of more than just measurement: governments that pursue GDP growth may be making their citizens worse off than they might be. The Economist's latest online debate is intended to wrestle with these questions. Andrew Oswald, of the University of Warwick, is proposing the motion that "GDP growth is a poor measure of improving living standards". Opposing him is Steven Landefeld, director of the United States Bureau of Economic Analysis (BEA), which produces America's national income and product accounts, of which GDP is a prominent feature. Mr Oswald's starting point is a report published last year by a <http://www.wikiprogress.org/images/Stiglitz_Report.pdf> commission chaired by Joseph Stiglitz, a Nobel economics laureate. The Stiglitz commission (of which Mr Oswald was a member, and which was <http://www.economist.com/business-finance/economics-focus/displaystory.cfm? story_id=E1_TQQQSJPJ> written about in The Economist last September argued that official statistics should shift away from measuring production to measuring "well-being". Mr Oswald points to two pieces of evidence in particular: the Easterlin Paradox, the finding that increasing wealth does not make countries happier; and global warming, which is a sign that people should produce less and enjoy the planet more. Mr Landefeld remarks that GDP was not intended to be a comprehensive measure of society's well-being. Even so, he says, it has stood up well as a measure of living standards. Nothing has bettered it yet. That isn't to say that GDP can't be improved, though—and Mr Landefeld points to ways in which the BEA has been trying to bring that about. He too notes the conclusions of Mr Stiglitz's commission. This promises to be a lively and enjoyable debate on an important subject: how much use is GDP in measuring how well off people are? Mr Oswald and Mr Landefeld have set out what they think. I'm glad that we have two such prominent people to lead the debate. And I'm looking forward to the next round of arguments and to what you, on the floor of our online chamber, have to say. -- You are subscribed. This footer can help you. Please POST your comments to [email protected] or reply to this message. You can visit the group WEB SITE at http://groups.google.com/group/yclsa-eom-forum for different delivery options, pages, files and membership. To UNSUBSCRIBE, please email [email protected] . You don't have to put anything in the "Subject:" field. You don't have to put anything in the message part. All you have to do is to send an e-mail to this address (repeat): [email protected] .
